Unrated

If this becomes a trend, it's potentially revolutionary: "Goldman Sachs's fund arm is
developing a new global credit strategy for institutions that
will rely on market prices rather than heavily-criticised credit
rating agencies."

Any purveyor of information is vulnerable to the fact that the
subjects of the information have much more at stake than the (many)
consumers of said information. You care more about the contents of
your credit report than any individual bank. In the case of the banks,
this is counterbalanced by the fact that they have more money, and
perhaps paradoxically, that they are fewer. But in the case of things
like bond ratings and search engine results, you always have to guard
against the possibility that the subjects will find some way to bribe
the intermediary.

The Goldman fund kills that incentive with
transparency--if its ratings are bad, that will show up when it
underperforms the market. On the other hand, there's a real risk that
its analysis will nonetheless converge with the ratings agencies,
because of career risk for the managers. If your fund drops when the
market does, you still have a job. If your fund drops at some other
time, then no matter how good your probabilistic analysis, sheeplike
investors will move their money elsewhere. Like the sellout risk,
career risk seems to afflict most intermediaries that operate long
enough. (Including, natch, the government.)

Still, over the
short term, it will be interesting to see whether investors prefer
their black box to the black boxes at Fitch's and Moody's.

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